Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Q4 2012 Earnings Presentation
55 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Feb 13, 2013
Slide 1: Earnings Review and Business Update
FOURTH QUARTER 2012 Earnings Review and Business Update February 13, 2013 Jim Rogers Chairman, President and Chief Executive Officer Lynn Good Executive Vice President and Chief Financial Officer
Slide 2: Safe Harbor Statement
SAFE HARBOR SAFE HARBOR STATEMENT This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-look
Slide 3: Topics for Today's Call
TOPICS FOR TODAY’S CALL 2012: A year of accomplishment Our near-term priorities Status of major construction projects Commercial Businesses update 4Q-2012 and year-end earnings review and financial update Regulated utility customer volume trends Meeting our financial objectives Fourth Quarter
Slide 4: Track Record: Produced Strong Results in 2012
TRACK RECORD: PRODUCED STRONG RESULTS IN 2012 Regulatory highlights: Successfully closed merger and began delivering benefits to customers Obtained regulatory approval of Edwardsport IGCC project cost-recovery plan Operational highlights: Achieved best employee safety record in company’s history
Slide 5: Resolving Our Near-Term Priorities One-by-One
RESOLVING OUR NEAR-TERM PRIORITIES ONE-BY-ONE Crystal River 3 repair or Obtain Resolve North retire decision approval of Carolina Edwardsport investigations settlement Constructive Achieve in rate case service for outcomes Edwardsport Merger Achieve Nuclear fleet integration Financial performa
Slide 6: Crystal River 3 Update
CRYSTAL RIVER 3 UPDATE On February 5, Duke Energy announced its intention to retire CR3 The company also announced it had reached a resolution of the company’s insurance coverage claims through a mediation process Both Duke Energy and its insurance carrier, Nuclear Electric Insurance Limited (
Slide 7: Duke Energy Carolinas – North Carolina Rate Case
DUKE ENERGY CAROLINAS – NORTH CAROLINA RATE CASE Major Components of Filing Rate Case Drivers On February 4, Duke Energy Carolinas filed a rate case with the North Carolina Utilities Commission 7% (NCUC) to request an average 9.7% net increase in retail revenues, or ~$446 million The filing is pre
Slide 8: Edwardsport Update
EDWARDSPORT UPDATE Settlement Approved by Indiana Commission In December 2012, the Indiana Commission approved the Edwardsport settlement The settlement agreement included a cap on estimated construction costs of ~$2.59 billion as of June 30, 2012 (1) The Indiana Commission modified the settle
Slide 9: Continuing to Advance Our Fleet Modernization Program
CONTINUING TO ADVANCE OUR FLEET MODERNIZATION PROGRAM CLIFFSIDE LEE CC DAN RIVER CC EDWARDSPORT SUTTON CC (Wayne County) $125 Spent as of 12/31/2012 (1) Estimated $3,425 expenditures to complete project (1) $2,100 $725 $175 $675 $425 Duke Progress Duke Duke Progress Jurisdiction Carolinas Carolinas
Slide 10: Commercial Businesses Update
COMMERCIAL BUSINESSES UPDATE International Commercial Power Chile Brazil Midwest Generation Renewables Entered Chile in July with Rainfall conditions could Cost-based capacity Completed construction acquisition of 240 MW impact hydro dispatch filing: of 650 MW of additional Yungay diesel gen
Slide 11: Delivering Value to Our Stakeholders
DELIVERING VALUE TO OUR STAKEHOLDERS Customers Employees Investors Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 11
Slide 12: Full Year-2012 Earnings Summary
FULL YEAR-2012 EARNINGS SUMMARY Adjusted Diluted EPS (1) (2) Adjusted Segment Income 2012 Plan (4) 2012 Actual (in millions) US Franchised Electric and Gas $ 2,090 $ 2,086 International 420 439 $4.38 $4.32 Commercial Power 100 93 Total Business Segments $ 2,610 $ 2,618 $0.71 $0.70 Other (160) (135)
Slide 13: USFE&G Weather-Normal Volume Trends
USFE&G WEATHER-NORMAL VOLUME TRENDS Full-year 2012 weather-normalized load USFE&G Weather-Normal Volume Changes(1) growth of 0.6%, in-line with expectations for ~0.7% growth Residential Commercial Industrial Total Industrial supported by strength in the automotive sector, particularly in the Duk
Slide 14: Meeting Our Financial Objectives
MEETING OUR FINANCIAL OBJECTIVES Current year Long-term Balance Dividend earnings earnings sheet growth guidance growth strength Achieved 2012 Delivered earnings at upper earnings CAGR of Increased the dividend ~2% Maintained strong, end of guidance 5.7% between investment- range of 2009 and
Slide 15: Appendix Materials
APPENDIX MATERIALS Item Slides Final Review of 2012 Assumptions 16-18 Duke Energy 4Q-2012 Earnings Supplement 19-32 Additional Financial Information 33-37 Upcoming Events 38 Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 15
Slide 16: Final Review of Key 2012 Assumptions
FINAL REVIEW OF KEY 2012 ASSUMPTIONS Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 16
Slide 17: Business Segment Structure
BUSINESS SEGMENT STRUCTURE DUKE ENERGY U.S. FRANCHISED COMMERCIAL ELECTRIC AND GAS INTERNATIONAL POWER North and South Duke Energy Duke Carolinas Carolina Renewables North and South Duke Energy Progress Carolinas Carolina Retail Progress Florida Florida Duke Indiana Indiana Ohio T&D Midwest Coal Gen
Slide 18: Update on Key 2012 Assumptions
UPDATE ON KEY 2012 ASSUMPTIONS ($ in Millions) 2012 Assumptions, 2012 YTD including Progress (thru 12/31/12)2 Merger1 Adjusted Segment Income: USFE&G $2,090 $2,086 International $420 $439 Commercial Power $100 $93 Other (3) ($160) ($135) Duke Energy Consolidated (4) $2,450 $2,483 Average Shares Outs
Slide 19: Duke Energy 4Q-2012 Earnings Supplement
DUKE ENERGY 4Q-2012 EARNINGS SUPPLEMENT Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 19
Slide 20: 4Q-2012 Earnings Summary and Key Drivers
4Q-2012 EARNINGS SUMMARY AND KEY DRIVERS Adjusted Diluted EPS (1) (2) 4Q-2012 Key Adjusted Earnings Drivers(4) USFE&G +$292 million +$0.42 ▲Contribution from Progress Energy utilities +$0.28 ▲Pricing and riders(5) +$0.07 ▲Adjustments to income taxes +$0.07 ▲More favorable weather +$0.03 ▼Higher O&M
Slide 21: Merger Integration Status – 4Q 2012
MERGER INTEGRATION STATUS – 4Q 2012 Non-Fuel O&M Run-Rate Non-Fuel O&M Synergies Key Initiatives Status Focus Area Release ~1,100 employees through Voluntary Functional Severance Program Consolidation Staffing process complete Rationalize real estate portfolio Supply Chain Consolidate financ
Slide 22: US Franchised Electric and Gas
US FRANCHISED ELECTRIC AND GAS Reported & Adjusted Segment Income Full Year Full Year 4Q12 4Q11 ($ in Millions) 2012 2011 Reported Segment Income $ 481 $ 206 $1,744 $1,181 Adjustments 17 -- 342 135 Adjusted Segment Income $ 498 $ 206 $2,086 $1,316 Full Year 2012 vs. Full Year 2011 Drivers Adjusted s
Slide 23: USFE&G Normalized Volume Trends, by Jurisdiction
USFE&G NORMALIZED VOLUME TRENDS, BY JURISDICTION Duke Progress Progress Duke Duke USFE&G Carolinas Carolinas Florida Indiana Ohio/Kentucky 2.3% 1.6% 1.5% 1.4% 1.1% 1.0% 0.8% 0.9% 0.7% 0.7% 0.5% 0.6% 0.6% 0.3% 0.2% 0.1% -0.1% -0.2% -0.4% -0.4% -0.5% -0.6% -1.4% -1.8% Residential Commercial Industrial
Slide 24: USFE&G Quarterly Weather Impacts
USFE&G QUARTERLY WEATHER IMPACTS Weather 2012 2011 Segment Income Pretax Impact Weighted Avg. EPS Impact – Pretax Impact Weighted Avg. EPS Impact – to Normal: Diluted Favorable / Diluted Favorable / Shares (Unfavorable) Shares (Unfavorable) First Quarter ($80) 444 ($0.11) $10 444 $0.01 Second Quarte
Slide 25: Crystal River Unit 3 Nuclear Outage
CRYSTAL RIVER UNIT 3 NUCLEAR OUTAGE (As of 12/31/2012) Reached a resolution of the company’s insurance coverage claims through a mediation process (the “mediator’s proposal”) Both Duke Energy and Nuclear Electric Insurance Limited (NEIL) accepted mediator’s proposal whereby NEIL will pay an addi
Slide 26: Progress Energy Florida Cost of Removal History
PROGRESS ENERGY FLORIDA COST OF REMOVAL HISTORY (1) 2012 ($ in millions) 2010 (2) 2011 (2) 1Q (2) 2Q (2) 3Q 4Q YTD (2) Amount $60 $250 $58 $-- $60 $60 $120 recognized Balance $461 $246 $216 $232 $169 $110 $110 remaining (1) The cost of removal balance remaining is impacted by accruals in accordance
Slide 27: Regulatory Calendar
REGULATORY CALENDAR CAROLINAS OHIO INDIANA Progress Energy Carolinas Duke Energy Carolinas Capacity Cost Recovery Electric Distribution Case Gas Distribution Case IGCC-9 Tracker IGCC-10 Tracker NC Rate Case NC Rate Case Docket 12-2400-EL-UNC Docket 12-1682-EL-AIR Docket 12-1685-GA-AIR Docket 43114 -
Slide 28: Progress Energy Carolinas – North Carolina Rate Case
PROGRESS ENERGY CAROLINAS – NORTH CAROLINA RATE CASE Major Components of Filing Rate Case Drivers On October 12, Progress Energy Carolinas filed a rate case with the North Carolina Utilities Commission (NCUC) to request an average 11% net 13% increase in retail revenues, or ~$359 million* The fili
Slide 29: Overview of Duke Energy Ohio Rate Cases
OVERVIEW OF DUKE ENERGY OHIO RATE CASES Electric Distribution Rate Case Highlights Retail revenue increase requested ~$87 MM (5.1%) Proposed rate base ~$1.1 B Return on equity requested 10.6% Equity component of capital structure 53% Hearings begin March 25, 2013 Rates expected to be in effect 2Q 20
Slide 30: International
INTERNATIONAL Reported & Adjusted Segment Income Full Year Full Year 4Q12 4Q11 ($ in Millions) 2012 2011 Reported Segment Income $ 89 $ 96 $ 439 $ 466 Adjustments -- -- -- -- Adjusted Segment Income $ 89 $ 96 $ 439 $ 466 ($ in millions) International Adjusted Full Year 2012 vs. Full Year 2011 Driver
Slide 31: Commercial Power
COMMERCIAL POWER Reported & Adjusted Segment Income Full Year Full Year 4Q12 4Q11 ($ in Millions) 2012 2011 Reported Segment Income $ 16 $ 31 $ 87 $ 134 Adjustments (16) (1) 6 52 Adjusted Segment Income $ -- $ 30 $ 93 $ 186 Full Year 2012 vs. Full Year 2011 Drivers Adjusted segment income decreased
Slide 32: Other
OTHER Reported & Adjusted Net Expense Full Year Full Year 4Q12 4Q11 ($ in Millions) 2012 2011 Reported Net Expense $ (182) $ (45) $ (538) $ (76) Adjustments 91 28 403 51 Adjusted Net Expense $ (91) $ (17) $ (135) $ (25) Other Adjusted Net Full Year 2012 vs. Full Year 2011 Drivers ($ in millions) (Ex
Slide 33: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 33
Slide 34: Dividend Policy
DIVIDEND POLICY Duke Energy dividend policy DUK Annual Dividend Per Share History Continued growth in dividend at a rate slower than growth of adjusted diluted EPS $3.06 $3.00 Targeting a long-term payout range of 65% $2.88 $2.94 to 70% of adjusted diluted EPS $2.76 $2.64 Dividend supported by s
Slide 35: Simplified Financing Structure
SIMPLIFIED FINANCING STRUCTURE Duke Energy (HoldCo) Cinergy Corp. Duke Energy Progress Energy (HoldCo) International (HoldCo) * Duke Energy Duke Energy Duke Energy Progress Energy Progress Energy Carolinas Ohio Indiana Carolinas Florida Duke Energy Duke Energy Renewables and Kentucky Other Commercia
Slide 36: Duke Energy Liquidity
DUKE ENERGY LIQUIDITY Liquidity (as of December 31, 2012) ($ in millions) Duke DE PE DE DE DE Energy Carolinas Carolinas PE Florida Indiana Ohio Kentucky Total Master Credit Facility (1) $ 1,750 $ 1,250 $ 750 $ 750 $ 750 $ 650 $ 100 $ 6,000 Less: Notes Payable and Commercial Paper (2) (195) (300) -
Slide 37: Credit Ratings
CREDIT RATINGS (As of 2/13/2013) Fitch Moody's S&P DUKE ENERGY Stable Stable Negative Corporate Credit Rating / Issuer Rating BBB+ Baa2 BBB+ Senior Unsecured Debt BBB+ Baa2 BBB Commercial Paper F-2 P-2 A-2 PROGRESS ENERGY Stable Stable Negative Senior Unsecured Debt BBB Baa2 BBB DUKE CAROLINAS Stabl
Slide 38: Upcoming Events
UPCOMING EVENTS Event Date Analyst Day February 28, 2013 1Q 2013 Earnings Call (tentative) May 3, 2013 2Q 2013 Earnings Call (tentative) August 7, 2013 3Q 2013 Earnings Call (tentative) November 6, 2013 Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 38
Slide 39: For additional information on Duke Energy
For additional information on Duke Energy, please visit: www.duke-energy.com/investors Fourth Quarter and Year-End Earnings Review and Business Update February 13, 2013 39 39
Slide 40: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Fourth Quarter Earnings Review & Business Update February 13, 2013 Adjusted Diluted Earnings per Share (“EPS”) The materials for Duke Energy Corporation’s (“Duke Energy”) Fourth Quarter Earnings Review and Business Update on February 13, 2013 include
Slide 41: Non-GAAP Measure Definitions
EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of this non-GAAP financial measure for future pe
Slide 42: Adjusted Effective Tax Rate Reconciliation
mark-to-market impacts of economic hedges in the Commercial Power segment. Reconciliation of the adjusted effective tax rate for the year ended December 31, 2012 to the most directly comparable GAAP measure is included below (amounts in millions). Adjusted Earnings, Pre-Tax Income $3,635 Edwardsport
Slide 43: Adjusted Operation, Maintenance and Other
Adjusted Operation, Maintenance and Other The materials for Duke Energy’s Fourth Quarter Earnings Review and Business Update on November February 13, 2013 include a discussion of Duke Energy’s adjusted operating, maintenance and other expenses for the quarters and year-to-date periods ended December
Slide 44: Adjusted to Reported Earnings – Q1 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended March 31, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Economic Adjusted Progress Hedges (Mark- Total Reported Earnings Merger to-Market) * Adjustments Earnings SEGMENT INC
Slide 45: Adjusted to Reported Earnings – Q2 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended June 30, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Adjusted Progress Reported Earnings Merger Earnings SEGMENT INCOME U.S. Franchised Electric and Gas $ 297 $ - $ 297 Co
Slide 46: Adjusted to Reported Earnings – Q3 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended September 30, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Emission Economic Adjusted Progress Edwardsport Allowances Hedges (Mark- Discontinued Total Reported Earnings Mer
Slide 47: Adjusted to Reported Earnings – Q4 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended December 31, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Economic Adjusted Progress Hedges (Mark- Total Reported Earnings Merger to-Market) * Adjustments Earnings SEGMENT
Slide 48: Adjusted to Reported Earnings – Twelve Months 2011
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2011 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Progress Emission Economic Adjusted Energy Edwardsport Allowances Hedges (Mark- Discontinued Total Reported Earni
Slide 49: Adjusted to Reported Earnings – Q1 2012
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended March 31, 2012 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Voluntary Economic Adjusted Progress Opportunity Edwardsport Hedges (Mark- Discontinued Total Reported Earnings Merge
Slide 50: Adjusted to Reported Earnings – Q2 2012
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended June 30, 2012 (Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Achieve, Economic Adjusted Progress Hedges (Mark- Discontinued Total Reported Earnings Merger to-Market) * Operations
Slide 51: Adjusted to Reported Earnings – Q3 2012
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended September 30, 2012 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, DNC Host Economic Adjusted Progress Committee Edwardsport Hedges (Mark- Discontinued Total Reported Earnings Merg
Slide 52: Adjusted to Reported Earnings – Q4 2012
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Three Months Ended December 31, 2012 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Progress Economic Adjusted Energy Edwardsport Hedges (Mark- Discontinued Total Reported Earnings Merger Charges to
Slide 53: Adjusted to Reported Earnings – Twelve Months 2012
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 2012 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Voluntary DNC Host Economic Adjusted Progress Opportunity Edwardsport Committee Hedges (Mark- Discontinued Total Repo
Slide 54: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of December 31, 2012 (In millions) Cash and Cash Equivalents $1,424 Short-Term Investments 333 Subtotal 1,757 Less: Amounts Held in Foreign Jurisdictions (1,104) $653 Plus: Remaining Availability under Master Credit Facility 4,900 Total A
Slide 55: Operations and Maintenance Expense
Duke Energy Corporation Operations and Maintenance Expense For the Three Months and Years Ended December 31, 2012 and 2011 (In millions) Three Months Ended Years Ended December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Operation, maintenance and other (a) $1,744 $1,065 $5,006 $3